Anyone paying attention to national politics these days is hearing a lot of discussion about the nation’s housing market.  There’s a lot of finger pointing and a lot of solutions flying around amongst folks running for, or trying to stay in office.  Fortunately, Montgomery County hasn’t had plummeting housing prices like many other parts of the country since the crisis began around 5 years ago.  But then again, we never had the high run up in prices they enjoyed prior to that time.  Prices around these parts have been relatively stable throughout the last five years.  The main impact around here was a significant drop in real estate activity.

Looking back, 2006 was by most measures the peak year of the last housing cycle.  The total number of all closed transactions reported in MLS that year, including single family residences, condos, lots, and rentals, was very robust.  Transactions declined steadily after that, and bottomed out in 2009 with 24% fewer transactions than in ‘06.  Since then, transactions have modestly increased but are still down 16% from ’06 levels.  The last two years have been encouraging and with continuing low interest rates and a fairly good local economy, there’s reason to be hopeful that these numbers will continue to improve. 

But Montgomery County has a diverse real estate market and while the county as a whole has an optimistic outlook, certain segments have not fared as well.  For example, while total transactions are down 16% since ‘06, single family residential and condo sales are down by 28%.  Rental transactions mostly make up for the difference with an astounding 64% increase since 2006.  Unfortunately, this reflects the human toll of the housing crisis as the American dream of home ownership has slipped away from so many families as they lost their homes and subsequently moved to rental properties.  It also reflects how much more difficult it is these days for prospective buyers to get home loans due to tightened credit standards.

Another segment that has not fared well is the sale of residential lots which are still down by 47% from ‘06.  This is an indicator of the level of new construction by local builders.  It is not so much an indicator of the level of new construction by large builders as much of their new construction is in planned communities where lot sales are sold directly by the developer and not through MLS.

The above discussion all relates to Montgomery County as a whole.  But as we all know, various areas of the county have been affected differently and have had a different rate of recovery.  The county wide recovery in single family residential sales, for example, is mostly being driven by increases in the southern part of the county.   And the area with the highest growth rate is the southeastern part of the county which has actually grown to a level that exceeds 2006. 

These statistics also tell the story of how the real estate business has changed for the typical realtor.  The smaller number of transactions has caused some realtors to leave the industry to pursue other employment with a more reliable income stream.  And many of us who remain now spend more time assisting landlords and prospective tenants than we did five years ago.   While that line of business may not be as lucrative due to its lack of complexity, it is just as rewarding as it still involves finding homes for families to enjoy.

While these numbers are interesting, what does it tell us about the future?  Unfortunately, past history isn’t always a reliable predictor of the future.  There are simply too many uncontrollable variables for this humble Realtor to make a sound prediction.  But it does give reason to be hopeful.  Like most local residents, it’s easy to understand the attraction of Montgomery County to newcomers because of its geographic qualities, proximity to major employment areas, and recreational attractions.  Those characteristics make our county an attractive draw to many demographic groups, from young families starting out to retirees entering a new phase of life. 

So let’s raise a glass to hope and continued recovery.